I remember, early in my monthly continuity days, waking up on the first of the month, looking at my Blackberry, and seeing hundreds of emails from my credit card processor — one for each transaction, indicating all of the credit card pre-approved subscription payments getting processed for the month. It was a moment of sweet appreciation. Even now, as I see the monthly credit card charges flow through, I take a few moments to express my appreciation for the members who have confidence and faith in me to subscribe. It’s an honor.
Then it all goes off the rails when you log in and discover how many pre-approved transactions failed. The credit card number was correct last month. The card expiration date is still valid. But the card declines for some reason. This is often 7–10 percent of total charges each month. And, unless you have an active system for retrying and following up, it can be the single largest source of membership churn.
I recently attended the Subscription Insider’s Payment Boot Camp East in New York City. Kathy Greenler Sexton, CEO and publisher of Subscription Insider, hosted the event. The room was packed with subscription companies from around the country.
One of the key lessons was about the amount of testing and management that must go into failed charges. Denise McKinlay has managed this process on my team since 2005. Companies with thousands of monthly transactions must have a team, as there could be hundreds of cards to retry.
One of the key takeaways is to test. Check out the heat map from LegalShield (formally known and Prepaid Legal.) This heat map charts three years of credit card retry history, indicating the rate of success of those retry attempts. The biggest takeaway is that Mondays are the worst days of the week for Prepaid Legal credit card retry acceptance rates, and Thursday and Fridays the best. Also notice how the beginning and end of the month perform so much better than the middle of the month.
There are a lot of theories about when customers make payments to their credit card accounts, but the most important is to understand your numbers. Test and see what works best for your customer mix.
It’s important to have a process behind your credit card retries and make it as easy as possible for your customer to update her credit card information. With credit card companies converting to chip cards, new cards issued because of security breaches, and customers replacing their card to prevent fraudulent charges, there are a lot of reasons your cards aren’t going through.
One advanced tool VISA provides is an automatic updater service. If your customer’s card number or expiration date changes, you can receive the information direct from VISA, saving your customer the hassle of updating information in your file. This service alone can cut failed charges in half. If your merchant processor hasn’t told you about it and you want more information, feel free to send me an email at RS@RobertSkrob.com.
Subscription Insider is hosting a Payment Boot Camp West in Los Angeles later this year. I highly recommend that you join Subscription Insider and make plans to attend Payment Boot Camp when Kathy announces the dates and registration details. It could provide you with many of the solutions to the single largest reason for subscription churn.